Remittance sent by expatriates is mostly used for consumption and in the non-productive sectors in the country, according to a Bangladesh Bank study.
Experts attributed the situation to lack of action plan.
They said the successive government had failed to formulate the much needed action plan to divert the remittance into the productive sectors instead of consumption that eats up 90 per cent of hard earned foreign currency.
Besides, many families spend a big portion of the surplus remittance on purchase of land, causing artificial price hike of land and losses of arable land, amount of which is at least 1 per cent annually, they said.
The country’s remittance inflow stood at $13.83 billion in the just-concluded year from $14.17 billion in 2012.
Remittance largely helped in maintaining the balance of payments as the country is dependent on import of raw materials for industries and export-oriented manufacturing plants. But it (remittance) is also pushing up the country’s overall expenditure for the imported consumer goods like household appliances, chemicals, automobiles and gold.
Bangladesh Institute of Development Studies director general MK Mujery told New Age that the government should do something meaningful immediately to divert the remittance into the productive sectors.
The economy would suffer in the long run if the present trend of remittance uses continue, he said.
There are three types of saving schemes run by the government for the remittance.
But the expatriate Bangladeshis purchased bonds worth Tk 974.2 crore last year, according to the Bangladesh Bank assessment.
The amount is only 8.4 per cent of the total sales of the bonds in the same year, suggesting that the existing plan to bring the remittance into the public development activities was ineffective.
‘The existing system is not working,’ Mujeri said.
A survey conducted by Bangladesh Bank in 2011 said 90 per cent of remittance was used for meeting the basic needs.
Seventy-five per cent households receiving remittance spent those on food purchase, 42 per cent on loan repayment, 65 per cent on education, 57 per cent on treatment, 49 per cent on marriage and 4 per cent on running legal battles.
The BB study team which interviewed 3,010 families found that 41.6 per cent household spent surplus remittance on purchase of land and flat, 49.3 per cent on renovation of homesteads, 4.5 per cent on purchase of vehicles and 0.7 per cent on credit business.
Some 13.33 per cent household engaged in single ownership business with the remittance, 2.46 per cent in joint-venture business, 7.5 per cent in share business and 21.13 per cent utilised the remittance to send other members of the family to overseas for jobs.
BB in the study noted that remittance should be invested in the real economic sectors to strengthen economy and keep inflation at a tolerable level.
Former Bangladesh Bank governor Saleh Uddin Ahmed said it was a big task to divert the remittance into the real sector.
He, however, said despite the odds the government needed proper
action plan to encourage the remittance senders to invest in the productive sectors.
The BB study noted that there were scopes to channel the remittance fund into the country’s energy and infrastructure sectors which need huge investment to cater the need of the country’s growth.
It hoped that the government could raise $20-30 billion worth fund if the expatriate Bangladeshis are given guarantee of hassle-free investment with high returns.
-With New Age input
